You Hired a Fractional CFO for Your Restaurant. What Should They Actually Be Doing?
By ProfitWise - a Visa Business Plans company
A restaurant owner recently described his monthly meeting with his Fractional CFO.
“We go over the P&L. He tells me food cost is up, we talk about labor, and then he sends me the reports.”
I asked him what happens next.
He thought about it for a second.
“Not much, really.”
And that’s where the problem was.
Knowing that food cost increased is useful. But if you’re paying for CFO-level help, the conversation shouldn’t end there. The conversation should START there! Someone should be helping you understand why it increased and, more importantly, what you can do about it.
Maybe the cost of a few important ingredients has gone up, and your menu prices haven’t changed. Perhaps portions have slowly grown, or a dish that used to have a great margin is now one of your biggest sellers and isn’t nearly as profitable as it once was.
Once you understand what’s happening, you can decide whether something needs to change.
The same applies to labor.
It’s easy to look at a report and say labor cost increased last month. A more useful conversation looks at what was happening in the restaurant at the time. Maybe you added people because sales increased. Maybe overtime is becoming routine on certain shifts, or you’re staffing Friday night the same way you did a year ago even though the restaurant’s sales pattern has changed.
This is where a Fractional CFO should earn their seat at the table.
The job isn’t simply to explain last month’s numbers. Those numbers should become the starting point for conversations about what you do next.
Let’s say you’re considering opening for lunch.
At first, the idea sounds pretty simple. You’re already paying rent, the kitchen is sitting there unused during the day, and opening a few hours earlier could bring in additional revenue.
But before changing the hours, someone should help you put numbers behind the idea. You need to understand what the additional labor will cost, whether the lunch menu can produce the margins you expect, and roughly how much you would need to sell each day for those additional hours to make sense.
Now you’re no longer looking backward at a financial report. You’re using financial information to make a decision before spending the money.
The same thinking applies when you’re considering another manager, a major equipment purchase, changes to menu prices, an expansion of your catering business or another location. Each decision has financial consequences that are much easier to think through before you commit to them.
At ProfitWise, this is how we approach Fractional CFO work. We start with the bookkeeping because any analysis is only as good as the numbers behind it. Once we know those numbers are accurate, we can spend our time on the questions that actually matter to the owner. What are you thinking about doing next, and what do the numbers tell us about that decision?
Sometimes the most valuable thing a Fractional CFO can do is challenge an idea before the owner commits to it.
You may be excited about opening a second location because the first restaurant is packed every weekend. Before you sign another lease, though, it makes sense to understand whether the first restaurant is generating enough profit and cash to support the second. You also want to know how long you can comfortably carry the new location while it builds its customer base and what happens if that takes longer than you expected.
You may still decide to open it.
The difference is that you’ll know what you’re getting into.
Restaurant owners already have plenty of reports. Your POS system can generate reports. QuickBooks can generate reports. Your bookkeeper can give you financial statements.
If your Fractional CFO is simply giving you another report and telling you what happened last month, you’re probably not getting everything you should from that relationship.
A good Fractional CFO should help you understand what happened last month.
Then the real conversation should begin.
